USFDA warns Jubilant unit for violating good manufacturing practices

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Jubilant Life Sciences said on Thursday that Jubilant HollisterStier, a unit located in Spokane in the US had received a warning letter from the United States Food and Drug Administration (USFDA) for violating current good manufacturing practices (cGMP).

The USFDA has specified it may withhold approval of new applications or products where the company is listed as the drug product manufacturer, until the violations are corrected to the satisfaction of the regulator, the company said.

The Spokane facility in Washington state is used to contract-manufacture sterile injectable and allergy therapy products and contributed 7% or R195.51 crore to the firms consolidated sales in H1FY14 and 4% or R20.72 crore to consolidated Ebitda. Total revenues reported by the Jubilant Life Sciences in H1FY14 were R2,793 crore while the Ebitda was R518 crore.

We expect that the ongoing manufacturing, distribution and sale of products from this facility will not be impacted as the (warning letter) will affect new approvals only, the company said. Jubilants shares plunged nearly 10% its worst fall in about four years to close at Rs 126.05 on Thursday on the BSE.

According to the USFDA website, this is the second Jubilant unit overseas to have received the regulators warning. In February this year, Jubilant HollisterStiers Montreal unit had received a warning letter, which was last updated on March 5 and identified significant cGMP violations at the facility.

The issues identified in the Montreal warning letter included points such as failure to thoroughly investigate any unexplained discrepancy in a batch to meet any of its specifications and the company distributing finished products despite the failure of the batch to meet acceptance criteria during visual inspection.

The inspection also noted water running on the floor of the equipment washroom that was tracked into the dirty equipment staging room and further into the pharmaceutical corridor leading to the sterile production hallway, a product line and the vial filling area, the USFDA said.

When contacted, the company's PR agency declined comment on whether the matter has been resolved as yet or not. However, supplies from the unit have not been suspended.

The (companys) response will identify corrective actions already completed as well as some pending corrective actions to ensure ongoing cGMP compliance, the company said, adding that it would respond to the letter on or before December 12.

Jubilant HollisterStier is a contract manufacturing services provider with three production units and apart from the Spokane plant, operates facilities in Salisbury in US, Montreal in Canada and Roorkee in India.

The warning comes at a time when Indian drug makers which produce nearly 40% of generic and over-the-counter drugs for the US, have been battered by a spate of regulatory actions. Mumbai-based Wockhardts second production facility was recently placed under an import ban. Ranbaxys three production units have also been placed under import ban due to violations in manufacturing practices. In May 2013, the company also pleaded guilty and paid $500 million as penalty to charges of various manufacturing violations and making misstatements.

However, USFDA warnings issued to US-based units of Indian companies have not yet translated to an import ban later. Sun Pharmaceutical Industries subsidiary Caraco Pharmaceutical Laboratories and Ranbaxys Ohm Laboratories, both based in the US, had received warning letters in 2009. However, violations identified in both the cases were later resolved, without any further action.

Jubilant posted consolidated sales of Rs 1,436 crore in Q2FY14, which represented a 17% year-on-year growth. Its Ebitda for the same period fell 1% y-o-y to Rs 276 crore.

Its consolidated FY13 revenue of Rs 5,161 crore, saw a growth of 21% from FY12. It also posted an Ebitda of Rs 1,054.8 crore in the same period.

The 4.38-acre Spokane facility was established in 1921 and employs 550 personnel, according to Jubilant HollisterStiers website. The facility also houses a 6,000 sq-ft laboratory which provides quality analytical testing services. Jubilant has seven manufacturing facilities in India and three in North America, according to its annual report.